Data on angel returns

Many people – quite rightly – ask what returns they should expect from angel investment. At this year’s USA angel conference in San Francisco, Scotland’s Professor Richard Harrison from the University of Edinburgh’s Business School gave a thorough data-based overview of angel portfolio returns. 

His key points were:

– annual returns (IRR) vary from 17% to 37%.

– 50 is the magic number as only at this portfolio size does the risk of an IRR of less than 10% fall below 20%.

– for portfolios below 20 companies 30% show a negative IRR but 20% generate returns of over 75%.

His presentation can be found here.

Please follow and like us:

2017 Angel Summit focuses on next 10 years

The tenth Annual New Zealand Angel Summit will be held at Cable Bay Winery – Waiheke Island from 1 – 3 November 2017. It’s theme; “Doubling down on success… the next ten years!”

New Zealand is now decade in to formal angel investing in New Zealand and has amassed some impressive statistics for a nation of our size. Over $500m into nearly 1000 deals in the more formal part of our market. Ten years ago there were 4 clubs and 100 or so angels. Today there are 10 clubs and over 650 angels. All this activity has delivered hundreds of jobs and tens of millions of revenue. It’s this value creation we want to continue to accelerate.

Ten years ago there were 4 clubs and 100 or so angels. Today there are 10 clubs and over 650 angels. All this activity has delivered hundreds of jobs and tens of millions of revenue. It’s this value creation we want to continue to accelerate.

The 10th Annual NZ Angel Summit is being held back where it all started at Cable Bay Winery on Waiheke Island. The choice of the small intimate venue continues the deliberate approach by the Angel Association to ensure it creates the right atmosphere for relaxed and informal conversations between active angel investors. The last two summits have sold out and it unapologetically prioritises attendance for those who are ‘doing deals’.

On the first morning the Summit will celebrate our community of investors and founders and their achievements in the past decade. There is so much to be proud of. The rest of the event will be spent digging into what we need to do to double down on our successes based on stories and insights from New Zealand’s heroes. International speakers, carefully vetted for their ability to both understand New Zealand’s unique circumstances and our aspiration for outcomes and success are flying in to present.

Showcasing Angel Investor Backed Ventures

The Showcase event which kicks off the event will include up to 10 venture in three tiers; seed, first formal round, last raise with a clear exit path. Each group of ventures will be introduced by an experienced angel investor who will talk about the investment opportunity, the return profile, valuations and potential acquirers.

New Zealand Investor Keynotes

Key Note sessions will include deep insight into what we can be proud of and what’s next. Stalwart investors will share memories of getting started – what was their vision and what inspired them, their challenges and what we need to do in the next decade to ensure value is delivered. These sessions will explore why our environment looked as it did 10 years ago, how far we’ve come and how we build on what we’ve created and set the vision for the next 10 years.

International Angel Investors

International special guests include Justin Milano (Good Startups, San Francisco, USA) who will explore the role of fear in the early-stage space. A veteran of Silicon Valley, Mr Milano has worked with angels and entrepreneurs to use cutting edge psychology and neuroscience, including emotional intelligence skills to help entrepreneurs and angels create break-throughs and unlock potential. Ron Wiessman (Band of Angels, San Francisco, US) will deliver a dose of reality exploring the critical the role of capital strategy and how tough it can be to source and entice an acquirers.

Actionable Insights

The extensive programme includes gritty content which covers; building strategic value, actively managing your portfolio for returns, Government’s role – identifying the right policy levers, the role of NZ corporate venture, and deep dives into term sheets – how have they have evolved and what role do they play in venture success lead by AANZ Expert Partner, Avid Legal’s Bruno Bordignon. Insight into which industries and technologies are going to irrevocably disrupt markets in the coming decades and make the best investment opportunities round out the valuable programme.

Finally, the event will also include the presentation of Arch Angel Award and two inaugural awards “Contribution to the industry” and “Lead angel and best venture award” – celebrating a great angel/founder collaboration.

To book your seat (preference is given to active angel investors) click here.

Please follow and like us:

Treatment of women & diversity in angel investment

Shabby, unkind and unprofessional treatment of women by men (and sometimes by other women) whether in venture capital or more broadly is unacceptable. While women have had the rough end of the stick for hundreds of years, being treated fairly and kindly should not be gender specific.

It is not about being a woman or a man or even religion or ethnicity. It’s about the values we choose to live by and which values give us a greater crack at success – however we define success!

How we treat each other and the importance of diversity is about a set of values and two values in particular – kindness and respect.

Supporting and scaling start-ups is no walk in the park. It’s often challenging and down right terrifying – for founders and investors. The fear of failure and rejection is always skulking in the shadows of fund raising, closing a sales deal and hiring senior employees. It’s anxiety inducing.

More kindness and respect would not go amiss. The AANZ believes both are key components of success, particularly when it comes to successfully scaling high growth startups.

We need to acknowledge that tough conversations are often necessary in our world. These may feel unkind but the pain can be minimised if respect and empathy – without bias – are at the heart of these conversations too.

Values complimenting kindness also support the importance of diversity. Kindness requires open-mindedness, curiosity and exploring different points of view. Successful founders live these values and these values are at the heart of the informed pivot and the ability to create and build value.

Kindness must underpin ensuring there is diversity in our deal flow, at our events and in our governance. Diversity mustn’t be about tokenism or ticking a box. Delivering diversity is about trying and looking harder to ensure it exists. It’s about valuing people to create value. We should select women (or Maori or Chinese or Buddhist) founders, speakers and board members based on their ability to shine and help others to shine. To do anything other than this is unkind – to everyone, and especially to the ‘box tickee’.

The AANZ Code of Conduct can be found here. We have added two clauses to the behaviours we expect. They are to be:
– Kind and respectful, and
– Supportive of diversity

As an industry we take responsibility, individually and collectively, for reflecting the behaviours set out in the Code of Conduct. We will talk quietly to those we are worried might not be reflecting these. We are not advocates of naming and shaming. That’s not kind or respectful.

The AANZ Constitution, however, makes it clear that our members must be “of good standing in the angel investment community” and there is provision for members to be expelled when this is no longer the case. The profound potential for common good inherent in angel investment is squandered when the self-interest reflected in unkindness is prioritised.

We all have circles of inspiration and impact – we must be the change we want to see – it’s powerful stuff.

Onwards…

Suse Reynolds
Executive Director

“Constant kindness can accomplish much. As the sun makes ice melt, kindness causes misunderstanding, mistrust, and hostility to evaporate.” – Albert Schweitzer

Please follow and like us:

Angel Investment – why it matters

I am often asked to explain what angel investment actually is, how the work that angels do differs from the work of venture capital funds, private equity brokers, investment bankers or even New Zealand’s government agencies who support business growth.  This paper provides a quick, but deeply informative guide to the high growth startup investment in New Zealand. To explain why it matters and what success will look like if we do it right.

It is also important to set out how high growth startup investment differs so fundamentally from other equity investment disciplines. At its heart this is about the extremely risky nature of this investment that is matched by the scale of returns. Returns New Zealanders need for our future economic and social wellbeing.

Click here to download. Please forward your comments or questions you might have to me here.

Please follow and like us:

New Zealand’s need for growth capital

As early stage investors we need to start getting real about the wisdom of our backing early stage, high growth ventures without far more consideration being given to where we source follow-on growth capital.

Even if we only look at last year’s New Zealand Venture Investment Fund’s seed co-investment data where about $50million was invested in early stage companies, the growth capital required for this cohort of companies is likely to be 10x this figure. So we are talking about finding $500m.

This is not just a problem for the investors in these companies; it’s a problem we need to grapple with in partnership with the government and the institutional investment community. These high growth companies are the engines of our economic growth. We can’t afford to drop the ball.

The development of an innovation led economy is widely accepted to take place over three ten-year horizons. We are coming to the end of ‘horizon one’ where the focus has been on inputs. New Zealand has done well here. The number of startups, early stage investors and dollars being invested has trended upwards over this period.

In the second ten-year horizon we should start to see outcomes from these innovation led companies in the form of jobs, export and tax revenue. But to generate these outcomes and see the true benefit of this investment, we need growth capital. Only then will the third horizon truly deliver in the form of financial returns and recycled capital and ultimately higher standards of living.

As I’ve just mentioned, there is no shortage of deal flow. The quality of that deal flow is improving every year too. This is in large part due to Government support for initiatives such as the Lightning Lab and the investor-led Tech Incubators. It is also a result of work others have done to upskill our entrepreneurs and angel investors.

To date, angels and other early stage investors have been able to fund the early growth of the companies meeting their criteria. We have been investing in startup, high growth ventures in a targeted sense for about 8 years but the really exponential upswing in investment has taken place in the last 3-4 years.

Quite logically, there is therefore an increasing and pressing need for growth capital in New Zealand.

This is illustrated in the recently released NZVIF data showing most investment is into existing deals. Angels are having the stay the course longer and dip back in their pockets for capital it could be argued should be coming from deeper more experienced pockets.

We need to give credit to those venture capital firms raising funds to meet the need for growth capital such as Movac’s Fund 4, the $40m fund GD1 is working hard to raise and the $40m fund raised by Oriens Capital. But it is not enough.

Closing the “growth capital gap” is going to need New Zealand’s pension and other institutional funds to broaden their investment mandates to allocate at least 3-5% to the growth needs of our high growth, early stage companies. We must support work Immigration NZ is doing to inject capital from experienced high network migrants into these companies. We need to tap into our rural and regional wealth more effectively. We have therefore been delighted to see angel networks forming in Taranaki and Marlborough reflecting an increasing awareness that high growth, tech based companies can be the source of future jobs and social and economic wealth in the regions. The banks also need to come to the party.

There is a great deal at stake here. We can’t afford “a hands off, market forces will deliver” approach. If ever a NZ Inc approach was needed, it is now.

Marcel Van Den Assum
Chairman
Angel Association New Zealand

Please follow and like us:

Help benchmark the NZ ecosystem globally

Maximising the success of New Zealand’s startup ecosystem, and the worldwide ecosystem on which we rely requires input from startups themselves.

If data isn’t collected then how do we know what’s working and what’s not? Where our ecosystem could do with more support and where its doing quite well under its own steam. This is why the AANZ is supporting distribution and participation in the 2016 Global Startup Ecosystem Report (#GSER).

The GSER will include insights from more than 20k executives across the globe which will deliver leaders of all kinds; investors, government and support service providers; with an in-depth understanding of how to best attract, accelerate, and sustain startups.

Conducted by Startup Genome (formerly Compass Research), the report also gives startups themselves a benchmark to measure how they stack up to others across the globe.

By completing this survey founders will enable NZ’s leaders to:
• Assess and benchmark the NZ startup ecosystem across 50+ key metrics
• Accelerate the pace with which NZ ecosystem leaders reach consensus on key issues and develop action plans for change
• Attract a greater share of global resources to our region
• Empower startups everywhere to use data in decisions around raising funds, locating an office, and recruiting top talent
.

The 2015 Global Startup Ecosystem Report helped millions of local leaders globally reach consensus on specific challenges and drive action to improve their ecosystems.

By participating in the 2016 Survey, you will help New Zealand voice to be heard among the voices of entrepreneurs globally and accelerate the global startup ecosystem for hundreds of New Zealand’s entrepreneur’s locally and millions of entrepreneurs worldwide.

*All the information you provide in the survey is confidential. Results are published in aggregate values only.*

To participate in the survey click here and share the link with the founders in your ecosystem.

Please follow and like us:

What do angels need to grow early stage investment industry?

We have interviewed Nelson Gray at the Asian Business Angels Forum and AANZ Summit 2015, in Queenstown. Nelson Gray is an educator, angel investor, mentor, fund manager, and non-executive director of the Scottish Angel Capital Association.

Nelson Gray explains what investors need to understand in order to get support to achieve successful exits and grow the early stage investment industry.

You can meet a quality network of investors and experts in early-stage company growth, acquisition and exits in person by registering your place at the 9th Annual NZ Angel Summit 2016.banner NZAngelSummit16

Please follow and like us:

Follow-on investments

During the Asian Business Angels Forum and AANZ Summit 2015 we talked to Nelson Gray, educator, angel investor, mentor, fund manager, and non-executive director of the Scottish Angel Capital Association.

In this interview Nelson Gray talks about what angel investors should know about follow-on investments.

 

You can meet a quality network of investors and experts in early-stage company growth, acquisition and exits in person by registering your place at the 9th Annual NZ Angel Summit 2016.

banner NZAngelSummit16

Please follow and like us:

What is great about NZ angel community?

The following interview with Nelson Gray, non-executive director of the Scottish Angel Capital Association, was conducted at the Asian Business Angels Forum and AANZ Summit 2015.

Nelson Gray talks about what is great about the New Zealand angel investment community and what New Zealand can do better.

You can meet a quality network of investors and experts in early-stage company growth, acquisition and exits in person by registering your place at the 9th Annual NZ Angel Summit 2016.

banner NZAngelSummit16

Please follow and like us:

Engaging young people

We have interviewed Nelson Gray at the Asian Business Angels Forum and AANZ Summit 2015. And in this video Nelson Gray tells us his toughts on the role of angels in engaging with young people.

You can meet a quality network of investors and experts in early-stage company growth, acquisition and exits in person by registering your place at the 9th Annual NZ Angel Summit 2016.

banner NZAngelSummit16

Please follow and like us:

Lead Partners

NZTE NZVIF PWC

Expert Partner

NZX AVID AJ Park “FNZC.jpg”

AANZ Summit Sponsors

Callaghan Innovation “UniServices” Kiwinet “Spark”